Citadel Limits Redemptions in Two Hedge Funds

New York (HedgeCo.Net) – Chicago-based Citadel Investment Group has frozen redemptions from its two largest hedge funds after investors moved to withdraw $1.2 billion, according to a letter sent to clients on Friday.

The letter, signed by CEO Kenneth Griffin, informed investors that withdraws in the Kensington and Wellington Funds may resume as early as March 31st. The funds, which manage about $10 billion making them the firms largest, have lost 49.5 percent of their value this year through December 5th.

“We have not made this decision lightly,” Griffin said. “We recognize how a suspension impacts our investors, especially those with current financial obligations of their own to meet.”

The letter also stated that Citadel will absorb a large portion of the funds’ expenses, something that clients usually are responsible for, in the range of 3 to 4 percent of assets.

While Citadel’s two largest funds may be struggling to get through the year, three other funds in the Citadel family which manage about $3 billion, have climbed 40 percent this year.

This marks only the second year since the firm’s launch in 1990 that Citadel will report a loss. The only other loss was posted in 1994, at 4 percent. Hedge funds as a whole have had posted one of the worst years to date, losing 18 percent on average, according to data compiled by Chicago-based Hedge Fund Research.